USD/CAD consolidates near multi-month lows, just below mid-1.3400s

• USD/CAD continued gaining traction for the third consecutive session on Friday.
• The ongoing slump in oil prices undermined the loonie and remained supportive.
• Fed rate cut speculations weighed on the USD but did little to hinder the move.

The USD/CAD pair now seems to have entered a bullish consolidation phase and was seen oscillating in a narrow trading band, just below mid-1.3400s, or near nine-month tops.

The pair added to its recent strong gains and continued scaling higher for the third consecutive session on Friday on the back of a slump in crude oil prices, which undermined demand for the commodity-linked currency – the loonie.

USD/CAD remains well supported by tumbling oil prices

The bearish pressure surrounding the black gold remained unabated on the last trading day of the week amid growing market concerns over the fast-spreading coronavirus and its negative impact on the global economic outlook.

The ongoing bullish trajectory seemed rather unaffected by firming market expectations that the Fed will cut interest rate to offset any negative impact of the deadly virus on the domestic economy, which kept the US dollar bulls on the defensive.

The USD was further pressurised by a continuous slide in the US Treasury bond yields to allt-time lows. The combination of negative factors did little to hinder the pair's positive move, albeit might now keep a lid on any further gains.

Moving ahead, market participants now look forward to Friday's economic docket, highlighting the release of Canadian GDP report and some second-tier US macro data, in order to grab some meaningful short-term trading opportunities.

Technical levels to watch